Arrow Electronics, Inc. (ARW) recently announced that the company has entered into a $1.2 billion five-year credit agreement. The new revolving credit facility expires on August 19, 2016.
This new credit facility replaces the $800 million revolving credit facility and $200 million term loan that were scheduled to expire in January 2012. As of July 2, 2011, the company had $222,500 outstanding under the revolving credit facility. There were no outstanding borrowings under the revolving credit facility as on December 31, 2010.
Management stated that the company’s capacity to generate good levels of cash flow, strong balance sheet, and the renewed credit facility should provide substantial financial flexibility to fund growth.
Earlier, Arrow launched a tender offer to acquire all of the common stock of Chip One Stop for ¥220,000 per share or $2,857 per share.
Based in Japan, Chip One Stop supplies electronic components to design engineers. The company partners with more than 700 suppliers of electronic components and allows customers to access selected stocked parts data and a sourcing request service through a comprehensive database with more than 8 million line items.
In 2010, Chip One Stop generated sales of approximately $47 million. As of June 30, 2011, Chip One Stop has more than 107,000 registered web customers in Japan from more than 36,600 companies.
The tender offer will expire on September 20, 2011. Management stated that the acquisition will strengthen Arrow’s presence in one of the largest electronics markets in the world.
We expect overall demand and margins to improve at Arrow Electronics as volumes ramp up. The recent acquisitions should positively impact the margins and bottom line.
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